Jana Partners Buys About 12% Of Barnes & Noble

The news had a salubrious effect on Barnes & Noble shares which jumped to its highest in nearly a year. Its stock closed Monday at $13.41, up 18.25%, on the New York Stock Exchange.

In a filing last Friday with the SEC, Jana Partners said it owns about 7 million shares of Barnes & Noble, representing a stake of 11.6 percent. Jana Partners also said it has an option to buy an additional 250,000 shares at a price of $13.00 each.

Jana Partners now becomes the third largest stakeholder in the company, after Barnes & Noble Chairman Leonard Riggio and Ron Burkle's Yucaipa Cos investment firm.

Jana Partners' purchase of the stake comes at a tough time for Barnes and Noble which is facing stiff rivalry from Amazon.com and others. The company is hoping to turn around with its Nook business and digital library.

Faced with falling book sales, Barnes & Noble has been assiduously developing its Nook digital reader business. The company's foray into the tablet market with the Nook Tablet was aimed to rival Apple Inc.'s (AAPL) iPad devices, as well as the Kindle Fire. While sales of Nook Tablet exceeded expectations, sales of the Nook Simple Touch e-reader product lagged.

The company has also been mulling a spin-off of the Nook digital books and e-reader business to unlock value. It recently named Cablevision Systems executive Michael Huseby as its chief financial officer, hoping to smoothen its digital-business transition.

Barnes & Noble had opened up for sale in 2010 and was offered a price of $1 billion by Liberty Media. But that did not happen. Nevertheless, Liberty Media invested $204 million in the company. Barnes & Noble is now desperate to avoid the fate that plagued Border, its one-time rival that was liquidated in 2011.

BKS closed Monday at $13.41, up $2.07 or 18.25%, on a volume of 4.8 million shares. In after hours, the stock gained $0.24 or 1.79%. In the past year, the stock has ranged between $9.35 and $18.73.